Rwanda has moved to regulate tontines, commonly known as ibimina, small schemes where a group of people contributes sums of money to make collective savings and lend money among themselves. A ministerial order governing ibimina was published on Thursday, August 22, providing further clarity on the operations and regulations of the schemes, which are determined by the law governing deposit-taking microfinance institutions. ALSO READ: How ibimina are changing the way rural residents live The ministerial order stipulates that all existing ibimina are given a period of six months to comply with its provisions, including registration at the sector level. The following is a breakdown of 15 things to know about the regulations of tontines in Rwanda. Requirements for establishing a tontine, and its governance A tontine is established by at least five people. Rules of procedure of a tontine determine administrative organs of the tontine and their functioning. A tontine must have a name that is not similar to the name of any other tontine registered in the same sector (an administrative entity under a district). 2. Principles governing tontines Tontines are governed by four principles, namely free entry and exit; one common purpose; equal or unequal contributions; and equal rights in decision making. 3.Sources of finances The main source of finances of a tontine is its members’ contributions. A tontine may also draw finances from donations, borrowings from financial institutions, net income from its operations, or any other legally recognised source. 4. Use of finances The finances of a tontine are used to lend loans to members. However, a tontine may carry out other investments upon approval by its general assembly. ALSO READ: Formal financial inclusion in Rwanda grew 39% in 2020-2024 5. Rights of a member A member of a tontine has general rights, including freedom to participate in the activities of a tontine; right to information on the functioning of a tontine and the management of its funds. The order provides that rules of procedure of a tontine may determine specific rights of a member. Requirements for membership of a tontine are determined by rules of procedure of the tontine concerned. 6. Obligations of a member A member of a tontine has general obligations such as complying with its rules of procedure and decisions taken by its relevant organs; paying contributions as agreed upon; paying back the loan that the tontine granted to them and its accrued interests; and attending the meetings organised by the tontine. Also, the rules of procedure of a tontine may determine specific obligations of a member. 7. Grounds for losing membership Grounds for loss of membership of a tontine include withdrawal from it; expulsion; and death of a member. 8. Tontine registration and related requirements A tontine is registered with the administration of the sector in which it operates. Application for registration is done online or by submitting the required documents to the Sector administration. Registration of tontine is free of charge. Application is accompanied by the tontine name, a list of members or a list of its representatives upon approval by its general assembly, total paid up contributions, and a copy of rules of procedure adopted by its members. 9. Responsibilities of the sector administration A sector administration has the responsibilities to provide facilitation, advice or guidance to a tontine operating in its jurisdiction on request or when considered necessary, and to mobilise registered tontines under its jurisdiction to comply with their respective rules of procedure. 10. Promotion and monitoring of tontines The ministry in charge of finance is responsible for promoting and regulating the functioning of tontines through its department of financial sector development. 11. Accounting records A tontine keeps accounting records justifying how the cash inflows and outflows are managed, especially records of members’ contributions collected and where they are kept, account statements, a register of loans disbursed, loans paid, outstanding balance and arrears, if there are any; and records of other sources of finance, investments made, incomes and expenses, and related supporting documents. The ministry in charge of finance determines the template for those accounting records. 12. Internal control A tontine puts in place necessary control mechanisms in a way that the initiator of a financial transaction is different from the person in charge of verification and the one in charge of approval. 13. A tontine can have a bank account A tontine may open and run an account in any financial institution in its name. Signatories to the account of a tontine are elected by members in accordance with the tontine’s rules of procedure. 14. Content of rules of procedure of a tontine Rules of procedure of a tontine include the name of the tontine, purpose of the tontine, requirements for membership. There is also modalities of suspension of a member, grounds and procedure for expulsion of a member; administrative organs of a tontine, their responsibilities and powers, and eligibility criteria for being a member. Additionally, there is modalities for management and use of finances of the tontine, modalities for provision of loans to members and the approving organ, modalities for dissolution, modalities for conflict resolution, modalities for amending the rules of procedure, and any other aspect contributing to the good functioning of the tontine. The ministry in charge of finance determines the template of rules of procedure of a tontine. 15. Tontine’s right to first charge – highest priority to be repaid A tontine has a first charge upon the contribution to which a withdrawing or expelled member is entitled within the tontine to cover any debts the member owes to it. In case the sum paid to the tontine is insufficient, the rules of procedure determine how the unsettled sum is recovered.
